What is Multi Level Marketing?
Make Sure You Understand This to Protect Yourself…
…and Maybe Earn a Lot of Money
What is Multi Level Marketing?
What is MLM?
Sometimes referred to as MLM or network marketing (although there can be some differences between these two), multi level marketing is a business and marketing model. I once have had the privilege to sit and talk with billionaire Rich DeVos. He is one of the pioneers of multi level marketing. Haven’t heard of him? Have you heard of Amway? At the time, I hadn't yet discovered the earning potential of multi level marketing, so I wasn't interested in a MLM business. Our conversation was about leadership and philanthropy, but I couldn’t help being impressed and intrigued by what he had accomplished. In fact, that meeting let me to begin my quest to understand the question, "What is multi level marketing?" Mr. DeVos and childhood friend Jay Van Andel, founded Amway, became billionaires and created a system where many people became extremely wealthy. There is some debate whether Rich DeVos and Jay Van Andel invented the multi level marketing concept, but it is indisputable that they put it on the map. They also won a landmark federal case that legitimized and defined what is multi level marketing and what it isn’t.
What is Multi Level Marketing?
The Concept
What is multi level marketing? It is a business model that can give people financial freedom, but it can also cause them frustration, alienation and indebtedness.The difference is in what company you join and
how you operate your multi level marketing business.
The multi level marketing business model is based on the theory of referral marketing. What is multi level marketing and it's referral system? It's where people introduce others they know to a product or service. The premise is that people are constantly recommending things like movies, restaurants, television programs, etc. to their friends. They can also refer a product offered by their multi level marketing company. Where this gets touchy is when referring crosses the line of being pushy and selling.
To learn more, click here for and excellent, free book.
What is Multi Level Marketing?
A Franchise
It is like a franchise. People are able to enroll as distributors with an existing business. They are able to learn techniques of marketing the company’s products, for which they earn a commission. Where it differs form a franchise is that there isn't the huge franchise fees. (Some franchise fees approach $1 million, where multi level marketing fees are usually under $500) As with a franchise, people receive training and support to learn how to operate the business. It allows distributors to step into a turnkey business franchise without having to go through all the expense, work and headaches of starting a business to their own from scratch. Some companies make this easier in that they offer the distributors websites they can send people to. Ideally, the MLM company would operate the website, take the orders, ship the products and handle the billing. A major drawback of many of the older style multi level marketing companies is that the distributors have to do things like take orders, ship or even deliver products. Multi level marketing companies such as these are not recommended, as they require much more work to earn a commission. The amount of support and training is an important factor... What is multi level marketing? - a personal development and business mentoring program. That is the case when a person is plugged into a good MLM company and team.
What is Multi Level Marketing?
A Leveraged System
This is the part of multi level marketing that has the greatest earning potential and appeal.It is a business that uses leverage to pay on multiple levels- hence the name. Here’s how that works… If Sue is a distributor for multi level marketing company XYZ, she can earn commissions form selling the products directly. For a multi level marketing company to have long-term viability, it must offer products and services that are unique and/or offer a good value to the retail consumer. If not, the sales will only be to distributors who remain in the business purely for greed. What is a multi level marketing like that? One that is destined for failure. Back to the leverage… The other way Sue can make money in her multi level marketing business is to find or recruit others who are also interested in having that sort of business.
If Sue enrolls her friend Mary as a distributor also, then Sue can earn some money from Mary’s efforts. Likewise, in many multi level marketing companies, if Mary brings Jane into the business, both Sue and Mary can profit. The ideas is to build a team so you can leverage everyone's efforts. The amount Sue earns from Mary and Jane’s efforts varies from multi level marketing company to company. It depends on the compensation plan that the company has. While Sue’s income potential from Mary’s efforts can be large, and will last as long as they both continue in the business, there is a delicate balance. I have been involved with the establishment of a multi level marketing company and its compensation plan. Some of my friends and mentors have just launched a nationwide cellular company that has unique value for its customers. It is a very involved process, and there must be a balance between providing a sound economic opportunity for the distributors, and providing a product or service that is competitively priced and a good value for the consumer. How is the money available to both pay the distributors, on multiple levels, yet still have a competitively priced product? That is because in a multi level marketing business, the marketing is word of mouth via the distributors. The company doesn’t have the huge marketing expense that traditional businesses must shoulder. This gives them a huge cost advantage. In my friends company, for example, the traditional cell phone companies spend millions in marketing. Think of all the full-page ads, television commercials, billboards, online ads, etc. they bombard us with. That’s why their service is so expensive, and they make people sign lengthy contract with huge penalties if the consumer ever wants or need to make a change. They spend tons of money acquiring a customer.
Sidebar:
What is multi level marketing in the telecommunications industry?Most people don’t realize this, but MCI and Sprint both began as multilevel marketing companies.
However, if Sue, Mary and Jane were using word of mouth advertising in my friend’s company, plus using their inexpensive cell phones, the cost of acquiring a customer is very low, and the money is available to pay Sue, Mary and Jane, plus give the customer a great price.The ability to earn from the efforts of others (the team you and they build) is very appealing and can be extremely profitable. This leads us to the next common question…
What is Multi Level Marketing?
Isn’t it an Illegal Pyramid?
Answer:It could be, but likely not. This topic warrants a complete discussion.
What is a multilevel marketing scam? Click here to learn how to detect and avoid those companies!
What is Multi Level Marketing?
The Best Kind of Leveraged Business
There is another unique way that multilevel marketing can leverage your income.Not all companies have this capability, and it is something that should be part of any MLM you decide to join. The best multilevel marketing companies provide you a way to
earn residual income.
If you click on the link above, you will see a much greater explanation of residual income. Briefly, residual or passive incomes are where you do something one time, yet continue to be paid numerous times for that one effort. Where you see that in multilevel marketing is where there is ongoing income as the customers continue to use the product or serviced. You make a sale once, but are paid over and over, as they continue to use the product or service. Mr. DeVos said that they only wanted to offer products that ultimately went down the drain. He was referring to the used cleaning products of vitamins that Amway sells. In my friend’s company, as customers continue to use their wireless service, the associates are paid every time their customer pays his bill. If you are considering any multilevel marketing company, you won’t build wealth very quickly if you are depending on one-time sales.
Residual income
is the way to build ongoing income and wealth- a fast track to financial freedom.
Sidebar:
This site is really about all aspects of personal finance. Making more money is a component of that, but we desire to help you in all areas of your personal finance – saving more, debt elimination, and managing your money wisely. I’d be remiss if I showed you a way of making more money without directing you to all the ways this site can help you with your complete financial picture. That said, please take a look at our
Home page
before you go, to see all the ways we can help you.
December 15 Special Announcement...There is a unique opportunity I need to tell you about. It is available for anyone either considering a multi level marketing business or already involved in a company. The short version is that you have a chance to participate in an online contest for anyone wanting to use the Internet effectively for Network marketing. It’s an InterNETwork Marketing contest. There is $20,000.00 prize money. All contestants get a free year of coaching from the world-renowned Renegade Network Marketer who is showing everyone the way. Most everywhere else you'd have to pay a large sum for multi level marketing trainnig. In this case everyone wins with this first-ever coop-etition! The contest and free coaching last for a year. Hurry, because the contest entry (and ability to get the coaching) closes on February 6, 2008.
Click here to enter. Ann Sieg, the coach, is one of my favorite and most important mentors. You can read a sampling of her insights in this free ebook. You can also read her outstanding book, from which also gives you lifetime access to the lead generation system she effectively uses.
Find out more.
But don’t forget to enter the contest!
Financial Freedom Trail Home
What is Multi Level Marketing? - All Rights Reserved
|
